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Nigeria offers fast-growing market potential and opportunities for investors

Author: Irina Kozlova Section: Interviews

Issue: November 2010, Vol. 5, No.10

Tags: RUSAL

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In this interview, Vladislav Soloviev, first deputy CEO of UC RUSAL, the Moscow-based, world’s largest aluminium company, talked about the ‘metals giant’s ongoing operations in Nigeria, the prevailing investment climate in the country and its unparalleled array of lucrative business opportunities available to strategic investors with keen business acumen and modern risk management expertise on emerging markets.

How would you assess RUSAL’s activities in Nigeria today?

In 2007 RUSAL acquired a 77.5% share in the Aluminium Smelter Company of Nigeria (ALSCON), a company whose assets include an aluminium smelter in the Nigerian state of Akwa Ibom, a port on the Imo River and a power station. This acquisition was a strategic and significant step towards completing our production cycle in West Africa. ALSCON produced its first metal in 1997, but was never fully completed before it suspended production in 1999. Its output during the short period of operations totaled 40,000 tons of aluminium. In 2000, the smelter was brought to a standstill with high production costs, inadequate gas supply, complicated marine access and lack of working capital cited as the main reasons. These problems were later successfully resolved by UC RUSAL. We carried out a comprehensive modernization program of ALSCON and re-launched the smelter in February 2008. RUSAL has invested about $200mln for development of its African assets and social program. Today the African continent is one of the most important strategic regions for RUSAL that aspires for the development and economic growth of this part of the world.

Are there plans to broaden RUSAL’s investment program in Nigeria?

RUSAL plans to completely modernize ALSCON till the end of 2011 so it can reach its full capacity of 197,000 tons per annum. The investment in the smelter’s modernization, including dredging of the Imo River, will amount to about $300 million. Once the smelter reaches its full capacity, it will create 1,900 local jobs and 90% of the employees will be Nigerian citizens. Additionally, 20,000 jobs could be created in the downstream aluminium manufacturing sector and through the development of infrastructure around the smelter, resulting in a positive improvement in the standard of living for Akwa Ibom state residents.

What is your general view on the investment climate in Nigeria?

Today, Nigeria is often perceived as a risky investment market. Nigeria, like many countries in the midst of development, requires further development of infrastructure, needs improvement in the area of sea port customs regulations. There is also a degree of ongoing political and economic instability. Juxtaposed against these obstacles is a fast-growing market and the lucrative opportunities it offers those with a keen eye and understanding of risk management.

The emergence of Nigeria as a major international economic force in West Africa is foreseeable by several key characteristics. While Nigeria is still suffering some economic instability and unpredictable fluctuations, it shows resilience in creating a more secure domestic business environment, enforcing reforms and attracting foreign investors. The country has also brought down inflation, started a privatization process and consolidated its banking sector, helping to boost regulation and increase predictability for investors.

“While considering the acquisition of ALSCON, RUSAL carefully researched all the possible influences and we are convinced that we made the right decision in becoming the first major Russian investor in Nigeria.”

Currently, Nigeria relies substantially on foreign direct investment into the oil and gas sectors and it is slowly but surely beginning to successfully attract investment into other sectors as well, IT and telecoms being the main focuses. International investors are still skeptical and need further assurance of Nigeria's viability as a secure and profitable destination for their operations.

While considering the acquisition of ALSCON, RUSAL carefully researched all the possible influences and we are convinced that we made the right decision in becoming the first major Russian investor in Nigeria. RUSAL has developed good relations with Nigerian partners and international business community in Nigeria through its commitment to the local community and best business practices. We hope to set a positive example for multinational companies involved across all sectors to invest and operate in Nigeria with a view to build thriving business operations.

No matter how trite it may sound, it is crucial for a transnational company like RUSAL to follow the modern business logic of thinking globally, acting locally. Nigeria is no exception here. We are adapting our operations to the way things are done in Nigeria while maintaining our identity as a Russian company. In fact, we find that Nigeria resembles Russia in several ways. The two countries have similar population numbers; they are both ethnically diverse and both have struggled to become competitive on the global market after many years of political and economic stagnation. And we hope that, like in Russia, RUSAL's success and investment will play its part in the economic growth in Nigeria and lead the way for further exploration and cooperation by the international community within this opportunity-rich market.